Kyocera Wireless Corp. v. International Trade Commission (Fed. Cir. 2008)

The International Trade Commission (“ITC”) may not issue a limited exclusion order that applies to all downstream products when it applies to parties not named as respondents to the ITC complaint, according to the Federal Circuit.

Broadcom Corporation (“Broadcom”) owns U.S. Patent No. 6,714,983 (“the ’983 patent”), which is generally directed towards a mobile computing device that can both communicate with wireless networks and operate in a reduced power mode to extend battery life. Broadcom filed a complaint with the ITC naming Qualcomm Incorporated (“Qualcomm”), and only Qualcomm, as the respondent. Broadcom alleged that thirteen Qualcomm chips and chipsets infringed several Broadcom patents, including the ’983 patent.

The ITC rejected Qualcomm’s invalidity arguments and determined that Qualcomm’s chips, when programmed to enable certain battery-saving features, infringe the ’983 patent. The ITC also found Qualcomm liable for inducing third party manufacturers to incorporate battery-saving software and Qualcomm’s chips into their mobile devices.

As a remedy, the ITC issued a limited exclusion order (“LEO”) excluding “[h]andheld wireless communication devices, including cellular telephone handsets and PDAs, containing Qualcomm baseband processor chips or chipsets that are programmed to enable the power saving features covered by claims 1, 4, 8, 9, or 11 of U.S. Patent No. 6,714,983, wherein the chips or chipsets are manufactured abroad by or on behalf of Qualcomm Incorporated.” Thus, wireless device manufacturers that were not respondents to Broadcomm’s ITC complaint were subject to the LEO because they purchased and incorporated Qualcomm chips into their mobile wireless devices outside the United States and then imported them into the United States for sale.

Qualcomm and third-party manufacturers and carriers appealed the ITC’s decision. On appeal, the Federal Circuit affirmed the ITC’s findings that the 983 patent was not invalid; affirmed the ITC’s determination of no direct infringement by Qualcomm; held that the ITC misapplied the standard for induced infringement; and determined that the ITC did not have statutory authority to issue an LEO against downstream products of non-respondents.

With respect to the LEO, Qualcomm and the third-party appellants argued that the ITC exceeded its statutory authority by issuing an LEO that excludes imports of downstream manufacturers who were not named as respondents to Broadcom’s initial complaint. In contrast, Broadcom and the ITC maintained that the ITC has authority to order an LEO which excludes all of a respondent’s articles that are determined to violate, regardless of the identity of the importer.

The Federal Circuit turned to the Commission’s authority to issue exclusion orders, which is granted under 35 U.S.C. § 1337(d). According to the statute, Congress created two distinct forms or exclusion orders: a limited exclusion order and a general exclusion order. The default and limited exclusion order “shall be limited to persons determined by the Commission [(i.e., the ITC)] to be violating this section,” according to section 1337(d)(2). By contrast, the Federal Circuit said, “a ‘general exclusion’ order (‘GEO’) is only appropriate if two exceptional circumstances apply. Specifically, under subsection d(2)(A), the Commission may issue a GEO if it is ‘necessary to prevent circumvention of an exclusion order limited to products of named persons’ or, under subsection d(2)(B), if ‘there is a pattern of violation of this section and it is difficult to identify the source of infringing products.’” Thus, the Federal Circuit said that an LEO is “both ‘an order limited to products of named persons,’ and one where the complainant has not demonstrated ‘a pattern of this section and [difficulty in identifying] the source of infringing products.’”

In this case, the court determined that the ITC did not have the authority to issue an LEO that applies to downstream products imported by parties not named as respondents to the ITC complaint. The Federal Circuit noted, for example, that Broadcom appears to have made a strategic decision to not name downstream wireless device manufacturers, most of whom were known, and to not request the ITC to enter a GEO. Consequently, the Federal Circuit concluded that the statute permits the LEO to exclude only the violating products of the named respondents.

Practice Tip:

When filing a complaint with the ITC, the patent holder should carefully consider whom to name as respondents to the complaint since a limited exclusion order cannot limit imports of downstream manufacturers that are not named respondents. Alternatively, the patent holder may wish to seek a general exclusion order, but the patent holder should be aware of the more stringent requirements necessary for obtaining such an order.